Can govt direct central bank on policy and regulations? Yes, says RBI Act

Section 7 of the RBI Act empowers the Centre to do so

The Allahabad High Court on Monday asked the central government to hold consultations with the Reserve Bank of India (RBI), under Section 7 of the RBI Act 1934, on the way forward for stressed power assets in the next 15 days.

Can the government issue directions to the RBI on regulatory and policy matters? The answer’s yes. However, to date, the government has never issued directions to the RBI on its regulatory and policy affairs. A similar provision is present in most statutes that deal with the regulators, such as the Insurance Regulatory and Development Authority of India and the